Master's Culminating Experience
This project was conducted in response to an Air Force decision to allow Department of Defense contractors to change the way that they propose efforts which will be produced under Department of Defense contracts at Wright-Patterson Air Force Base F-16 System Procurement Office (SPO).
The project consists of a benefit-cost analysis designed to specifically examine the benefits and the costs of the new system proposed. The future value of the costs and benefits were evaluated to determine the plausibility of the program.
The results were obvious. For a total cost of $30,905, the government could benefit almost $20 million. This is for the evaluated program alone. The entire process, once validated, could be applied across the F-16 SPO. The F-16 SPO receives approximately two new orders per year for the purchase of F-16s. An average program value is $300M. If the process were applied to all new programs, the savings would be applied to two new programs every year for average savings of $24M per program, or $48M per year. The total savings over ten years would be over $352 million.
The Air Force should look at this process very seriously. The reality of the matter is that the Air Force is uncomfortable changing the acquisition process, but for the savings involved, as outlined here, the process needs to be considered.
Peck, S. R.
(2000). Benefit Cost Analysis of Parametric Pricing Model for Procurement of F-16 Aircraft. .